DESGLOSE DEL SEGUNDO DEBATE

The Reconsideration Committee is chaired by Baroness Warwick of Undercliffe. The Committee co-opted one specialist member who had an appropriate level of experience to ensure robust decision making. The Committee met on nine occasions during the year and considered, and issued decisions relating to 21 cases where levy payers challenged their levy. Of these 21, two were referred to the Pension Protection Fund Ombudsman.

The Committee also considered 12 non-levy review cases relating to compensation payments, three in relation to the recovery of overpayments, seven in relation to compensation entitlement, and four maladministration complaints. Five cases were referred to the Pension Protection Fund Ombudsman.

Decision Committee

The Decision Committee was chaired by John Bevington until the end of October. From November, Alan Jenkins took over as Chairman. The Committee met three times during the year.

The Decision Committee takes decisions on matters which are normally delegated to the Chief Executive which he refers back to the Committee, as well as any specific cases assigned to it by the Board. This may be due to the particular circumstances or where additional Board member input is thought valuable or where it is judged necessary in the light of the possibility of future review or complaint.

Nomination Committee

The Nomination Committee met five times throughout the year as two non-executive and one executive appointment were made. In circumstances where non-executive appointments were made the Chair of the Nomination Panel was Lady Judge CBE. The Chairman of the Nomination Panel for executive appointments was Alan Rubenstein, Chief Executive.

Board appointments

The Secretary of State for Work and Pensions is responsible for appointing the Chairman of the PPF and as a ministerial appointment this is governed by the Code of Practice for Ministerial Appointments to public bodies. All other Board

appointments are made by the Board on the recommendation of the Nomination Committee. However, the Secretary of State must approve the appointment, remuneration and terms and conditions for the Chief Executive and the remuneration for other executive Board members. The Secretary of State also determines the fee for non-executive members.

The appointment of ‘ordinary’ members to the Board is governed by regulations under which the Board must include an independent member as part of its appointment panel.

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Governance statement continued

Appendix 4 - Account of Corporate Governance

As stated, the Board is committed to adhering to high standards of corporate governance and annually reviews its compliance against the UK Corporate Governance Code and the HM Treasury/Cabinet Office Corporate governance in central government departments: Code of good practice.

The principal areas of compliance are met as follows: The Board and Board composition

The structure of the Board is underpinned by the framework set out in the Pensions Act 2004 as well as developing governance and operational requirements. Committees have been established to serve these needs. The composition of the Board is determined by the skills, experience and diversity needed to deliver the PPF’s statutory functions and is supported by its members’ financial, investment, legal, risk management, operational and member representation knowledge.

The Board focuses on strategic issues, supporting the PPF’s performance against its strategic objectives, risk management and ensuring that these all support the long-term success of the organisation.

The Board recognises that effective behaviours and culture support organisational delivery and management of risk. The Board operates in accordance with its Board Manual which identifies how meetings should be conducted. Individual members also adhere to the code of conduct, guidance on dealing with potential conflicts of interest and guidance on expenses and hospitality.

Board effectiveness

The Board has an operational framework in place and has determined its behavioural values. The actual operation of this framework and these values as well as Board balance is reviewed through annual Board effectiveness evaluations. These evaluations are conducted internally with facilitation by external consultants every three years.

The Board has regulations in place for the appointment of ‘ordinary’ Board members and both the Board and its Nomination Committee consider the current and future needs of the Board in order to facilitate the Board appointment process. New Board members receive induction training and ongoing briefings are provided to support non-executive members’ understanding of the organisation’s operations and key risks. Board and Committee papers are dispatched a week in advance and the Board is supported by a dedicated secretariat.

Management of risk

The Board has set its risk appetite which it reviews at least annually. The Board is supported in its risk management role by its Risk and Audit Committee, its internal and external auditors and its Investment Committee. Regular reports are received from the members of the Executive Committee. The Chief Executive has established a Risk Management Committee and an Asset and Liability Committee to ensure effective day-to-day oversight of operational and financial risks. Information on risks and risk management processes is provided in Appendix 5.

Governance statement continued

Appendix 5 – The risk and control environment

Our system of internal control is designed to manage risk within our risk appetite rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable, and not absolute, assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the management of risks to the achievement of the Board of the PPF’s policies, aims and objectives. This process is also designed to evaluate the likelihood of those risks being realised and their impact should they be realised and to manage them efficiently, effectively and economically.

The system of internal control has been in place within the Board of the PPF for the year ending 31 March 2016 and up to the date of signing of this annual report and accounts, and accords with HM Treasury guidance.

Internal audit services are provided on an outsourced basis in accordance with ‘Public Sector Internal Audit Standards’. Audits are undertaken in accordance with an internal audit plan approved by the Risk and Audit Committee. Grant Thornton LLP, PPF’s internal auditors, continued to provide internal audit services.

The risk and control environment

As stated, our approach to management of risk follows the guidelines provided by HM Treasury in their document ‘Orange Book: Management of Risk – Principles and Concepts.’

Risk processes are embedded throughout the organisation and individuals’ responsibilities are reinforced through an annual communication. During 2015/16, we have delivered a number of improvements to the management of risk, including: • roll-out of new risk management framework

• further revision to our risk taxonomy • enhancement to our stress testing process

• refinement of our Board risks, including two new risks

• introduction of Risk and Control Self Assessments (RCSAs) across the organisation • refreshed incident management process

• introduction of Aladdin which has significantly enhanced monitoring of financial risks • planning our approach to adopting Own Risk Self Assessment (ORSA), and

• further strengthening of our in-house risk management team with industry specialists.

We undertake deep dives of particular risk types with risk owners at Board and executive committees to ensure that we are managing all the risks we face and that the controls we have in place are appropriate.

The PPF relies on various models of which some are identified as critical. There is an appropriate quality assurance framework (as defined in the Macpherson Report of March 2014) in place for these models. The quality assurance framework includes, but is not limited to, external audit, internal and external peer review, governance structures for review and challenge of model assumptions and outputs, developer testing and consideration of the relevant actuarial standards.

The PPF recognises the importance of managing information effectively. We therefore operate in accordance with the Security Policy Framework and related Data Security guidance issued by the UK Government. To help achieve this we gained certification to the ISO27001 Information Security standard in 2009 (successfully recertified in 2016) and carry out annual ISO27001 surveillance audits to ensure we maintain compliance with the standard.

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